Christmas credit card spending may hit €3.5bn

IRISH consumers in denial about their debt-fuelled credit card lifestyles are on course to rack up over €3 billion in debt this Christmas.

Research specialists Mintel Ireland published a report yesterday that lays bare the nation’s dependence on credit cards.

The ‘Credit Cards: A Nation in Debt’ report shows that 39% of Irish consumers aged 15 and over now own a credit card and are using their cards to tap into a lifestyle they otherwise couldn’t afford.

The report shows the number of credit cards issued to Irish consumers has rocketed by 40% since 2001 to reach 2.1m in 2006.

The report also shows: The nation’s credit card holders could have an estimated €3.5 billion credit at their disposal when they hit the shops this Christmas, compared with a total of €1.25 billion of debit last December;

Transaction volumes have increased by 67% in the last five years;

Transaction values have grown by a phenomenal 112% in the last five years.

One in five credit card users admitted to buying on impulse;

The average profit per card here is €66 — the third highest globally.

The report showed that consumers are more concerned about their weight than they are about the spiralling credit card debt.

Mintel’s head of research Julie Sloan said the trend of credit card dependence, and dangerously high levels of debt, is likely to continue.

“The rising cost of borrowing does not seem to have deterred credit card users and there may be a sense of denial here,” said Ms Sloan.

The report also highlights how competition between financial institutions is being suppressed, with consumers less likely to hold multiple cards because of the Government’s €40 charge per credit card account.

While adding up to e120m to Exchequer funds every year, the “stealth tax” measure is the only one of its kind in the developed world, the report said.

There was good news for consumers though, with credit card fraud down 24% in the last year following the introduction of “chip and pin” technology.

The State’s Money Advice and Budgeting Service (MABS) said people should be aware of an over-reliance on credit cards.

“The Mintel report highlights that credit cards are now widely available and used by consumers across Ireland,” spokesman Michael Culloty said.

“We would encourage people to exercise careful and responsible spending over the seasonal period, ensuring that they have the means to repay any debt incurred.

“This will avoid a situation whereby people are sleep-walking into financial difficultly without sufficient means for repayment.”

Contact MABS on www.mabs.ie or 1890 283438.